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Flying in the face of apparent economic woes, unemployment in Germany fell sharply to 6.6 percent in September, the lowest in 20 years, the Federal Labour Agency said Thursday.

The number of people out of work was down by 149,000 from August to September, and down by 231,000 year-on-year to stand at 2.79 million, the agency said. This is the first time that unemployment has dipped under 2.8 million since 1991.

Adjusted for seasonal effects, unemployment was down by 26,000 over the month, a much bigger decrease than the figure of 10,000 expected by experts surveyed by the Dow Jones Newswires.

"The situation on the labour market continued to improve in September. Demand for labour remains high," said labour agency chief Frank Weise.

Weise had recently warned of declining momentum in the labour market. Some economists say many companies would not be able to survive another economic downturn like the one that followed the world financial crisis two years ago.

But September's surprising statistics have lifted Weise's confidence: “The number of workers is growing, as are their social security contributions. The demand for workers in increasing.”

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